The Technology Agenda: Procurement’s Future In 4 Charts

Edward Cone

Oxford Economics asked more than 1,000 people in procurement jobs—executives and worker bees alike—how digital tools are remaking the function. The response was emphatic: Technology is changing the way procurement is done, in terms of day-to-day operations and also its capabilities at a strategic level.

In the big picture, technology is remaking the most fundamental infrastructure of commerce: the marketplace itself. Markets move on information, and information flows freely in the digital era to power transactions, collaboration, and strategic relationships. Our global survey of procurement executives ranks business networks behind only macro factors like globalization and commodity pricing as the economic or technology trend that will have the greatest influence on the function in the next three years.

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Non-executive workers also emphasize the importance of technology-powered collaboration and communications. They cite knowledge-exchange and collaboration platforms, mobile tools, and social media as most important to their daily work (our live interviews with procurement executives suggest that the social focus is largely on inside-the-firewall networks, although outward-facing tools like LinkedIn can also be valuable). Note the rapid mainstreaming of the Internet of Things (IoT), which allows unprecedented visibility into lifecycle and replacement status.

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Technology’s profound impact on routine operations includes the automation of critical processes—something that is well under way and expected to continue in the next two years. The chart below is one of my favorites, because it answers a key question while raising another one. Does it show that executives are more optimistic across the board about the pace of automation because practitioners know more about the inevitable headaches associated with implementation, or because execs have a more global view that gives them reasons to predict faster progress? In any case, the trend is strong and the future of procurement is automated.

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The reach of technology extends deep and wide, beyond traditional procurement tasks to sophisticated jobs like the management of supplier-related risk. A variety of tech-enabled solutions are in use today, but there is still plenty of room for growth in this area.

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Ultimately, business success is measured in money, and our surveys indicate that technology adoption is linked to superior financial performance. Companies with higher rates of growth and fatter profit margins tend to be more aggressive in their use of technology. Execs at high-profit firms are more likely to emphasize the importance of business networks, Internet of Things, and mobile; those projecting robust growth are more likely to use workflow and financial modeling tools to manage risk, while practitioners at these companies are likelier to say collaboration platforms, social media, B2B commerce networks, and IoT are important to day-to-day work.

Edward Cone is the deputy director of thought leadership and technology practice lead at Oxford Economics. He managed the Future of Procurement program and has worked on several big research projects for SAP.

Learn more about how the technology is shaping the future of procurement. Download Oxford Economics’ think piece and infographic on “The Technology Agenda.